Here’s an engaging article from a firm of Southend accountants…
One commonplace occurrence in a business owners life is when cash flow issues catch them utterly unawares. They do not see the hurricanes brewing on the horizon.
One day it’s happy days in the sunlight, the next day their business is stuggling to breathe.
And the truth of the matter is this is typically not an one-off. Frequently this ‘blip ‘ happens month on month. Staggering from cash crisis to cash crisis. Manifestly this is very demanding on a business owner’s time. It distracts focus from those areas of the business where the owner provides most contribution.
So what’s the real issue here? Why is this such a repetitive eventuality for so many firms?
The answer often boils down to how entrepreneurs work out their money position.
Each business has what I call the money stress points . These happen when massive payments have to go out of the bank. The monthly payroll, VAT payments to HMRC, and the quarterly lease due to the landlord and are prime examples. A once per month direct debit to a massive supplier is another.
But there’s nothing surprising here. All of these payments are wholly foreseeable. Why then, for many businesses do they cause the massive difficulties which could lead to the business needing help?
What regularly happens is that entrepreneurs look on their cash position as a image. They come up with an instant picture. At its most elementary, it’s how much is in the bank that day when they log on.
If all’s well at the bank, then they get on with the “more important” stuff, finding buyers, satisfying orders for example. But that is the difficulty with money. If you don’t keep on top of it, it returns to bite you when you are not expecting it.
The thing is, cash flow should be managed like you’re shooting a production, rather than taking a fast holiday snap shot!
The entrepreneur as the film director needs to see ‘The BIG Picture ‘ and be in full control of the entire movie direction. He uses an in depth script “dictating your money position at all times.
What this suggests is you can see what’s currently happening in your business ‘cash storyline’. More importantly you know what’s about to happen. You may then spot any future money issues far ahead and take action early to head these off.
So go on. Think of yourself as the film director managing “The Money Story” rather than an one off snapshot artist!
Until next time.
Paul Jackson.
Paul Jackson is the writer of the business success guide“The 27 Common Financial & Marketing Mistakes That Right Now Are Costing Owner-Managed Businesses �Millions Each Year” and also heads up a top firm of accountants in Southend.

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